A hard-hitting report from the Public Accounts Committee is causing much debate around how evenly the weight of taxation falls across UK workers and small business owners, in comparison to big businesses, writes Martin Hesketh, managing director of Brookson, a tax specialist for freelancers. This comes at a time when Her Majesty’s Revenue & Customs is keen to portray an image of ‘clamping down’ on tax avoidance and is gearing up to spot-check the paperwork of 20,000 small businesses, invariably including some IT contractor companies, from April.
At Brookson, we have been saying for a long time that, unfortunately, successive governments and policy makers have failed to understand or properly value the contribution of contractors, freelancers and other self-employed professionals. Not only do these independent professionals contribute directly to economic growth in the services they directly provide, but they are also a critical facilitator of the enterprise of other larger organisations across many key sectors in the UK.
Our customers have been busy getting on with driving economic growth for the UK economy for many years, despite this tradition of a lack of acknowledgment of their contribution from the state.They have battled with legislation which has seemed poorly targeted and enforced inconsistently by a variety of government departments. Moreover, the current tax regime still seems to be too concerned with viewing them as ‘disguised employees’ who don’t pay enough tax. At the same time, reports like that of the PAC seem to indicate there is a different attitude by HMRC towards big businesses, such as Goldman Sachs, who have been let off hefty tax bills. This is dispiriting for the flexible workforce as it gives the impression of a lack of a level playing field.
More positively, 2011 saw the first signs of our politicians starting to recognise the contribution from such flexible workers and a need to understand how they operate.We even saw some very supportive comments from the prime minister around National Freelancer’s Day, and some positive gestures in the Autumn Statement from the chancellor. Let’s hope 2012 is the year where the government translate some of these warm words into concrete action to support these self-sufficient, self-reliant and self-starting individuals.